Fit Your Enterprise to the Market - define what you are and what you're not

June 17, 2006 · by Ed Friedrichs

An excerpt from Reach Higher: Long-Cycle Strategies for a Short-Cycle World

An excerpt from Reach Higher: Long-Cycle Strategies for a Short-Cycle World

As you consider what you've discovered about the world in which you're doing business, it's time to evaluate how well your product or service array fits the market you've described. It's time to ask some careful questions about what the market really wants, focusing now on what segments of the market, specifically, you're approaching to assess the fit of your organization as it's currently constructed.

Since the variables are so broad, I'm only going to pose a series of questions for you to consider. If you're the CEO or part of the leadership team of your enterprise, you've probably spent some time already answering these questions. If so, revisit the answers to these questions based on your description of the world. Define why you should have each particular product or service offering based on the political, regulatory, sociological, economic, cultural and demographic trends you've identified. Trends are never precise, and in many areas there may be several alternatives based on conflicting notions about the future. Run several "what-if" evaluations based on different optional future scenarios. To learn more about this type of scenario planning, read Peter Schwartz' excellent book The Art of the Long View: Planning for the Future in an Uncertain World.

If you've not been involved in the design of the product and service offerings of your company, take the time to think through from your vantage point whether your offerings and the way they're presented to your customers seem reasonable and appropriate from your perspective of the world. As part of the leadership of a large firm, I often found that my leadership team and I had become really myopic. We'd been doing certain things in our firm for so long and were so convinced that they were still viable service offerings that we couldn't see emerging trends that were affecting the way our clients wanted us to work with them. Some of the freshest and most provocative insights I got were from younger staff members who offered a point of view we hadn't considered.

If you're not part of your organization's leadership, don't be discouraged if that leadership resists or treats your ideas as foolish - I'm ashamed to admit that, from time to time I was so convinced that we were addressing the market appropriately, I missed a key piece of information from someone offering an idea even though it wasn't their job to do so. My attitude toward these well-intentioned and often remarkably prescient ideas finally changed at an interesting point in time. Our human resources director came into my office one morning with a big grin on her face to tell me that, as of that day, half of the employees of the firm had not been born on the date that I joined Gensler. Nothing could have brought home to me more clearly how disconnected I had probably become from the generational issues in our society that separated my point of view from not only younger people in the firm but clients as well. Pay attention, senior executives - listen to the younger generation!

Now take a look at your organization, taking each product or service offering and describing why the way it's configured is well fitted to the trends you see coming in the following areas:

Political - What changes in political priorities and programs do you see coming, and how will they affect your specific product or service? Is there a trend toward new regulation or government scrutiny, or are there specific pieces of legislation pending that could impact (restrict or encourage) your specific product or service?

Financial - How will trends in interest rates, savings rates, or funds availability effect your specific product or service? Is consumer confidence in the economy stable or changing? What factors in the local, national or world economy or political situation might shift that mood, and how seriously will it impact your customer's buying decision for your specific product or service? What effect will currency rate fluctuations have on your products or services if you're buying or selling internationally? Even if you're not? What effect will the relative availability of capital or debt have on your business?

Technological - What changes in technology (such as documenting the human genome, the proliferation of high-speed and/or wireless connectivity, proliferation of features on cell phones, instant messaging, nano-technology, new materials being developed and biomimicry) will impact the design and delivery of your product or service, your sales and service channels?

Sociological - What trends in social institutions (such as religious, educational, cultural, social service, philanthropic, ethnic) will influence specific consumer groups for your product or service? Are any of your products or services designed to appeal specifically to one or more social institutions? Why? How? Should your products or services be more specifically tailored to individual ethnic or sociological groups?

Cultural - What cultural trends (such as amount of time various segments of the population spend in different leisure activities like video games versus television, the proliferation of gambling, increased availability of time and money for travel, the growth in the cruise ship industry, shifts in how people receive current news like internet and magazines versus newspapers and television) will impact how the consumer of your product or service will come to know about you, interact with and purchase your product or service and find out how others feel about it? What specific features of your product or service are designed specifically to respond to any of these trends?

Demographic - What age demographics are you serving? Are those ranges growing or shrinking? Is your product or service designed to specifically appeal to and fit the desires of your target age range? In what specific ways? Where do the target customers for each of your products or services live now and where will they be living in the future? Why?

Now step back from this exercise and imagine that you were going to start over.

Which of the products or services you're now offering have now and seem like they will continue to have a viable market? What specific trend characteristics that you've identified make this true?

How would you redesign each of these lines of business to respond more fully to these trends?

Which lines of business should you drop? (this is the most difficult question to face up to because of institutional inertia against change and the perceived personal risk to individuals whose careers or skill sets may make such change threatening)

In what geographies should you be offering your product or service? Why?

This is not a simple task. To get it right, it won't be the work of a single individual or committee but is rather the building of awareness of societal trends throughout your organization, allowing each incremental discussion about each product or service to be informed by careful consideration of fit to market - the real gritty marketplace with all of its complexity not a fantasy marketplace in someone's mind. Where, specifically, should this work take place? Each organization's culture and communication style is different and the forum for the formal and informal conversations must be tailored to fit you and your company's style.

In my career, this task was ongoing. It included formal and informal scenario planning and frequent discussions about how broader trends were impacting the viability of each of our service offerings. Over the years, we continued to hone the mix, occasionally dropping something that had, at one time, represented a significant segment of business.

We frequently added new service areas and geographies based on our assessments of the trends noted before. Some worked and some didn't. And as clearly as we tried to stay focused, we had our own institutional inertia based on the issues noted above plus another: we were a very entrepreneurial and competitive group. When someone undertook a new service line, they were bound and determined to prove that they could make a success of it. Their pride wouldn't let them do otherwise. Several noble efforts were hard to kill and painful in the passing. But all were worth it, encouraging and supporting experimentation. Many of them reshaped the firm, and all of them contributed to the body of knowledge about which businesses we should be in and which we should not.

Each area of business had to meet a couple of key criteria: we had to be true experts in any field we pursued, not just mid-level competitors. Starting up a new practice area without acquiring the expertise through merger or the purchase of a firm or team of people established in the field was a challenge. We were successful building from scratch in areas like tenant development work, airport planning, retail, and entertainment. In each case, we responded to an existing market with a new twist, an approach that was different from our competitors at the time based on our read of what the market really wanted.

Second, we had to be able to create a unique sustainable advantage, to offer something that was not easily copied. Serving clients consistently across a broad geographic area through a series of offices that behaved as a single firm without turf battles is an example. The rich network of relationships and trust that are required to support this type of national and, for us, international service provision takes years to develop and make effective. Our competitors found it easy to copy our marketing approach but devilishly difficult to deliver.

There were a few market areas in our field of business that we didn't enter, some by choice; some we missed. We chose not to pursue prisons. As large as that market was, there was something inherently antithetical to the nature of our design practice. We avoided condominiums. The risk of lawsuit was simply too high, irrespective of the quality of work we would do. A whole cadre of lawyers has built a thriving business of suing architects for their insurance limits within the 10-year statute of limitations on liability to which we're bound. See what I mean about assessing the political and regulatory environment? Adequate tort reform has not yet come about, and I'm pessimistic about any significant change in the foreseeable future. We should have pursued healthcare and schools - we missed a window of opportunity and lacked the patience and commitment to develop the depth of expertise to compete effectively according to our criteria of true expertise and an ability to create a unique sustainable advantage and were unwilling to acquire another firm to gain a toehold in those markets. And there were others.

Using this review as an outline, how would you assess the businesses you're in, not in, or should be in? Finding the appropriate venue for this assessment will depend on the unique character and culture of your organization. It seems to work best when it engages the broadest cross-section of people from across service and geographic boundaries and including people from the administrative or service side of your business.

How to convene this discussion: a case study

The following presents a case study based on my experience, illustrating how to bring this kind of discussion together. Our best discussions about fitting our enterprise to the market and for the tough discussions about what we should be doing and what we should not took place at our "Super Weekends." These intense sessions, filled with both work and play, boiled out the essence of how we would adjust our areas of practice and the systems and processes that supported them each year. For me they were also filled with all sorts of unintended consequences. The social time strengthened the bonds between people, deepening our ability to act collaboratively and interdependently, the keys to our pivotal unique sustainable advantage. And the inventiveness of people from different disciplines and geographic areas invariably led to "spontaneous combustion," new approaches that no individual or narrowly focused group would have thought of.

One particular "Super Weekend" was held simultaneously with a research group from within the firm dealing with global account relationships, allowing cross fertilization between this client service-focused team and our various practice area groups. Their final session was the capstone of a year of hard work by its 15 members. The leadership role we were playing serving numerous clients across broad geographic areas and service types was taking on increasing importance. Our strategy of providing seamless design work to financial institutions, corporations and professional services firms represented more than 50 percent of our practice and was growing every day. It's a thing that we could do day in and day out that other firms could promise but couldn't deliver as it required a deep culture of collaboration and interdependency. Later chapters will deal with designing your culture.

An outside speaker from IBM presented in-depth insights into their organization and how they manage global relationships. We had done extensive work with IBM in multiple locations and across many service types. They knew us well so were very open. IBM's dominant theme was the need to truly understand what they value, how their corporate culture and goals are driving their design and use of facilities and how the nature and history of the group which is commissioning and managing our work determines the style of the relationship we must develop to be successful. He gave us an in-depth view of IBM and how it has changed over the years. His clear message: stop selling what you've done or can do. Research who your client is, what their corporate style is and what measurements will be used by them to determine if the work you do is successful.

The "Super Weekend," got its name because of its sheer scale, more than 100 participants. Here's why it was so large. We had many task forces working within the firm for years in four categories: offices, design & delivery systems, firm-wide shared services, and practice areas. In order to develop a common agenda for the firm and to avoid redundant efforts, these groupings of task forces met together at some point during the year. Prior to the advent of the "Super Weekend," task forces had decided independently when and where to meet. The opportunity for cross-referencing between individuals and groups is tremendous. People who know each other's names through correspondence or e-mails or each other's voices had an opportunity to meet face to face.

The assembly of the practice area task forces represented by far the largest groupings in the firm. Each task force presented its accomplishments, strategies and goals followed by a work session to develop its agenda for the coming year. The charter for a task force calls for fostering innovation, sharing best practices and communicating internally and externally the work of the firm in each respective area.

The highlight of the meeting came with work sessions designed to foster collaboration between working teams with different priorities. Some clear strategies emerged with the clear message: our clients don't want a core service with other services added on. They want all disciplines to be truly integrated. This can only happen when project teams start out this way, with each team member respecting what the other brings in professional knowledge and skills, with a common mission to serve the client and without in-fighting over who "owns" the relationship. Graphics are not something to be added on. Facilitated interactivity with community interest groups, lenders and others who influence the process of approval of a project will lead to the best design solutions when done as part of the design process and not an additive service.

Administrative groups were also represented in these meetings based on a philosophy that for them to do their jobs well, they needed to be fully versed in the goals and ambitions of those who had to deliver our service day in and day out at a client level. These meetings invariably made each group, risk management, accounting, human resources, information technology and communications better service providers to their internal customers.

The platform of knowledge and support available in your organization is incredible. The question is, how do you harness it? This type of meeting distributes this knowledge and, if the task forces are well networked throughout your organization, the knowledge gained will be well disseminated.

We had long before identified a need through trends in our client organizations for an integrated body of design services across broad geographic range, able to deliver consistently high-quality design, production and project management no matter where, when or in what configuration a client may need it. Many of our clients were consolidating there enterprises, looking for single-source accountability across many disparate services they were contracting for. They were being cost reductive, shrinking their facilities management staffs and looking for an enterprise that could assume the coordinative responsibility they had once done in-house, while still offering incremental services on a cost competitive basis. We had built such a model, fleshing out many additional service products based on what our clients told us they wanted and needed. You can find a tremendous amount about what businesses you should be in by just talking to your client.

Using a very personal journey over a 35-year career as an architect, interior designer, and planner - the last eight years of which were spent as President of Gensler Architecture Design & Planning Worldwide, Ed Friedrichs presents a model for sustainable and effective business design in the 21st century in his forthcoming book Reach Higher: Long-Cycle Strategies for a Short-Cycle World. Now an independent consultant with Friedrichs Group, Ed Friedrichs looks at new opportunities for the design professions driven by today's client needs and demands.

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